Edge EBT thread

[EBTContractor]

You are correct that the APN will only include the Income Tax which HMRC says is due on the loans being treated as UK taxable income.

What about NI? Assume no NI if loans came from overseas/non-UK.

[DonkeyRhubarb]

What about NI? Assume no NI if loans came from overseas/non-UK.

HMRC are not treating the loans as earned income. That's why there is no class 1 primary or secondary nics.

[Rab]

HMRC are not treating the loans as earned income. That's why there is no class 1 primary or secondary nics.

That's interesting. The first tax demand they sent me (a year or two ago) included a NICs payment of around £90k. Since then the figure they've been quoting is for income tax of about £210k. So I'd assumed the worst case scenario of £300k plus interest, but they've not mentioned the interest for a while either.

[DonkeyRhubarb]

That's interesting. The first tax demand they sent me (a year or two ago) included a NICs payment of around £90k. Since then the figure they've been quoting is for income tax of about £210k. So I'd assumed the worst case scenario of £300k plus interest, but they've not mentioned the interest for a while either.

In the scheme, were you an employee of a UK company, employee of an Isle of Man company, self-employed or something else?

Did they say what class of NICs it was (class 1, 4 etc)?

I haven't heard of any other assessments including NICs.

[SimonJones]

HMRC are not treating the loans as earned income. That's why there is no class 1 primary or secondary nics.

I was under the impression that the HMRC targeted these loans as earned income and hence tax due on it. If this is not the case, what is HMRC targeting this loan as?

Can you please clarify. Thanks!

[DonkeyRhubarb]

I was under the impression that the HMRC targeted these loans as earned income and hence tax due on it. If this is not the case, what is HMRC targeting this loan as?

Can you please clarify. Thanks!

It can't be earned income or it would be subject to NICs.

They seem to be treating it as "other income", which is only subject to tax.

[Saleos]

Accelerated Payment Notices

HMRC has begun issuing 'precursor' letters to taxpayers in contractor loan arrangements warning that APNs will follow "in the next 1 to 8 weeks".

If you haven't yet taken professional advice you may wish to do so.

[SimonJones]

It can't be earned income or it would be subject to NICs.

They seem to be treating it as "other income", which is only subject to tax.

If HMRC is treating this loan as "Other Income" than surely they cannot apply IHT to so called "Other Income" as it's already subject to tax?

Isn't this double taxation on single entity - ie Tax and IHT?

What I'm trying to understand is, if this is indeed "Other income" as they say on which tax is due, than this is not a loan (it can't be both the "Other income" and Loan) surely! Therefore, if this is not classified as a loan than no IHT is due.

[DonkeyRhubarb]

If HMRC is treating this loan as "Other Income" than surely they cannot apply IHT to so called "Other Income" as it's already subject to tax?

Isn't this double taxation on single entity - ie Tax and IHT?

What I'm trying to understand is, if this is indeed "Other income" as they say on which tax is due, than this is not a loan (it can't be both the "Other income" and Loan) surely! Therefore, if this is not classified as a loan than no IHT is due.

It baffles me how the loan can be both income and a loan at the same time.

Others have tried to explain this but I still don't get it.

[horrada]

HMRC has begun issuing 'precursor' letters to taxpayers in contractor loan arrangements warning that APNs will follow "in the next 1 to 8 weeks".

If you haven't yet taken professional advice you may wish to do so.

1. Why are they sending APNs now whist Contractor Settlement Opportunity is in place until July.
2. What about settlement for contractors, who have requested settlement since October and have heard SFA to date.
Also I expect the scheme being sent APNs are the ones HMRC are aware of fighting them to the end and trying to intimidate to settle now on what HMRC perceive as good terms. Obviously they are talking bollocks.